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Sunday, March 27, 2011

Wal-Mart v. Dukes Threatens to Undermine Class Actions as a Tool for Social Justice

The Supreme Court will hear oral arguments in Wal-Mart v. Dukes, a sex discrimination class action against the retail giant, on March 29. AFJ’s Justice Watch blog will highlight specific aspects of the case in daily installments between now and the date of oral arguments. Today we discuss the important role class actions play in leveling the playing field for everyday Americans who challenge injustice in court.

If the Roberts Court rules for Wal-Mart and raises the bar for maintaining a class action, the result could be devastating for enforcement of civil rights and employment discrimination laws. Some of the most important civil rights cases in American history were class action lawsuits. Brown v. Board of Education ended racial segregation in public schools in a class action. Griggs v. Duke Power empowered employees to remedy seemingly neutral policies that disproportionately harmed racial minorities. The pollution case portrayed in the movie Erin Brockovich and the sexual harassment case portrayed in North Country were also class actions. Class actions have allowed for historic civil rights gains because of the unique tools they provide to combat discrimination and other forms of corporate misbehavior.

Class actions play an essential role in holding corporations accountable for their widespread unlawful behavior, particularly when the harm suffered by each individual is small relative to the larger discriminatory picture. An individual is far less likely to enforce rights in court if the recoverable damages are too small to justify the cost of lengthy litigation or arbitration, a fact which often allows corporations to get away with unlawful conduct. The Supreme Court has recognized this function:

The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.

As a result of the relative disadvantages of filing an individual claim, most plaintiffs who lose at the class certification stage, and are consequently unable to share the burdens of litigation with a larger class, do not pursue individual discrimination claims. One reason is that the cost of bringing a lawsuit can be much higher than the potential return to individual plaintiffs, resulting in “negative value” claims. For example, the average settlement in a sex discrimination claim deemed by the Equal Employment Opportunity Commission (EEOC) to have merit is $34,200, which is not enough to cover litigation costs and still compensate the plaintiff.

Many individual plaintiffs are also unaware that they have a claim. In the Wal-Mart case, for example, Wal-Mart strictly prohibits employees from discussing pay. It also tends to segregate women and men into different store departments. This keeps employees ignorant of pervasive pay discrepancies throughout Wal-Mart’s system. Even if aware they might have a claim, potential low returns and fear of retaliation keep individuals from seeking compensation when they have been discriminated against. Wal-Mart’s threats of retaliation are well-documented.

Class actions allow plaintiffs to uncover company-wide statistics that provide a more accurate measure of whether the company is engaged in a pattern of discrimination or its conduct has a discriminatory effect. The standard of proof in pattern-or-practice and disparate impact cases is also very different than in an individual lawsuit. In the former, courts look at the overall practices of a company, with plaintiffs carrying the burden of showing that unlawful discrimination has been the regular procedure or policy, or that while fair in form, company policy is discriminatory in operation. In the latter, the focus is on the decisions of management applied to each individual. Statistical evidence is often decisive in class actions, but may be irrelevant in individual lawsuits. Without it, however, discriminatory practices that can be seen in a company overview may remain hidden.

Click here to read more about this landmark case and download AFJ's comprehensive analysis.